TREASURY

Pre-Owned Asset Regulations

Dawn Primarolo: Schedule 15 Finance Act 2004 provides for an income tax charge on the benefit that taxpayers gain, in certain circumstances, from the continuing enjoyment of assets they formerly owned. The primary legislation leaves some matters—the operative date for valuations, and the rates of return which apply for purposes of the schedule—to be specified in secondary legislation. They also allow regulations to provide for assets to be valued less frequently than annually. More generally, they enable regulations to make further exemptions from the charge set out in schedule 15.
	The Inland Revenue issued a consultative document on 18 August 2004, "Taxation of Pre-Owned Assets: Further Consultation", seeking views on the matters to be covered by regulations. There was a full and constructive response and I am grateful to all who took part. We propose to make regulations as follows, having regard to the responses received.
	Valuation date
	As proposed in our consultation document, the valuation date for a tax year will be 6 April in the year or, if later, the beginning of the taxable period for which the asset in question first becomes chargeable.
	The prescribed rate
	The prescribed rate (to be applied to the values of chattels and intangible assets when quantifying the cash value of the benefit enjoyed) will be equal to the official rate of interest, as defined in section 181 of the Income Tax (Earnings and Pensions) Act 2003. The rate is currently 5 per cent.
	Valuations at extended intervals
	Regulations will provide, broadly, that land and chattels will be valued every five years. That is to say, a valuation will be made as prescribed in the primary legislation for the first tax year in which a particular asset becomes chargeable under schedule 15. That valuation will also be used in any of the four succeeding years in which a charge arises.
	If a charge arises in the fifth year after the first chargeable year, a fresh valuation will be made which will apply in the next four succeeding years, and so on for years 10, 15 and subsequent five-year anniversaries. If no charge arises for the fifth year, or any later five-year anniversary, no valuation need be made until the next tax year (if any) for which a charge arises, and a fresh series of five-yearly valuations will start from that year.
	Valuations will be carried forward in cash terms without adjustment (e.g. for indexation against asset price inflation, as the enabling power would permit).
	Equity release
	Schedule 15 provides exemption for any case where the former owner continues to enjoy an asset they have sold, so long as they have disposed of their whole interest in it (apart from the right of continuing enjoyment) and have done so either at arm's length or on arm's length terms.
	It became clear in consultation that this was not sufficient to accommodate all open-market equity release transactions, under which homeowners often sell only a part share in their property. I made clear last autumn that regulations under schedule 15 would cover the full range of bona fide equity-release schemes with arm's length providers, while continuing to bear down on schemes aimed at avoidance. With that in mind, we do not in general think it is appropriate to provide exemption for sales of a part interest which are made otherwise than at arm's length. If one member of a family needs to raise cash, and another member of the family is willing and able to provide it, there are other and more straightforward ways of structuring this than adopting the form of an equity release transaction.
	The point was however made in consultation that some intra-family part disposals can arise from patterns of behaviour adopted for good family or business reasons, for example where a child moves in to care for an aged parent and acquires an equitable interest in their shared home as a corollary of that, or where younger members of a family take over the active role in a family partnership, and in doing so acquire an interest from the partners who preceded them. And we also accept that any cases where asset owners have already sold a part interest within their family are unlikely, given the law as it stood at the time, to have chosen that approach primarily for tax avoidance purposes.
	Bringing together these different considerations, the regulations will extend the existing exemption (described above) to all sales done at arm's length where they involve the whole or a part of the vendor's interest in their asset. They will extend this exemption to any part sale, even if not at arm's length, so long as it was made before today and on arm's length terms. And this will also apply to future disposals if they are made for a consideration other than money or readily realisable assets.
	Regulations to this effect will be made shortly, in time to take effect from the commencement of the new charge on 6 April. The Inland Revenue will also be publishing their guidance on the interpretation and operation of schedule 15: it will be announced and made available on www.inlandrevenue.gov.uk/.

DEPUTY PRIME MINISTER

Development Plan Documents and Statements of  Community Involvement

Keith Hill: I am announcing today the publication for consultation of guidance on assessing the soundness of development plan documents (DPDs) and statements of community involvement (SCIs), and on the examination process itself. The consultation documents will be of interest to local authorities, agents, landowners, local residents and others likely to be involved in examinations of development plan documents (DPDs) and statements of community involvement (SCIs) forming part of local development frameworks produced under the Planning and Compulsory Purchase Act 2004. The guidance has been produced by the planning inspectorate.
	The consultation documents also include model forms and guidance notes to help focus representations on the soundness tests.
	The consultation will run until 30 May 2005. Copies of the consultation documents will be placed in the Libraries of both Houses and will be available to download from the planning inspectorate's website at: www.planning-inspectorate.gov.uk.

DEFENCE

Hercules Crash

Geoff Hoon: The RAF board of inquiry (BOI) has produced its interim report into the crash of the C130 Hercules in Iraq on 30 January 2005 with the tragic loss of all 10 personnel on board.
	I should emphasise that the BOI is not yet in a position to establish the cause of the crash. There is a great deal of detailed evidence that has yet to be analysed and a number of lines of inquiry that need further investigation.
	Based on the evidence currently available, the BOI has ruled out a number of possibilities. These are bird strike, lightning strike, mid-air collision, controlled flight into the ground, wire/obstacle strike, restriction in the aircraft's flying controls, cargo explosion, engine fire, sabotage (including the use of an improvised explosive device) and aircraft fatigue. These interim findings are supported by the UK air accident investigation branch (AAIB).
	There remain a number of other possible causes that require further investigation. The BOI is continuing its work, assisted by the AAIB which is also working independently from the BOI to ensure every possible avenue is explored. We will not be commenting or speculating further on the possible causes of the crash until the BOI has concluded.
	The families of those killed in the crash are being informed personally of the BOI interim findings.

ENVIRONMENT FOOD AND RURAL AFFAIRS

Sustainable Development

Margaret Beckett: I am delighted to announce that the Government's new sustainable development strategy "Securing the Future" is being launched today.
	The new UK sustainable development strategy represents a new level of commitment, and joined-up thinking, across Departments. It highlights four priority areas for immediate action—sustainable consumption and production, climate change and energy, natural resources protection and environmental enhancement, and creating sustainable communities. It provides a challenging work programme which has been developed, and which will be delivered, in partnership with business, local government, NGOs and the public.
	A supporting strategic framework to 2020, developed jointly by the UK Government, the Scottish Executive, the Welsh Assembly Government, and the Northern Ireland Administration, is also being launched today. This provides a shared purpose and a new set of five principles to underpin actions to deliver sustainable development across the UK.
	The strategy documents will be placed in the Libraries of both Houses, and are also available on the UK Government's sustainable development website.

TRANSPORT

GLA Transport Grant

Tony McNulty: The GLA transport grant for 2005–06 has today been determined by the Secretary of State for Transport at £2,161,015,000, following consultation with the Mayor of London. This grant is a block grant provided by the Government to Transport for London to support improvements to London Underground and other transport services in London. The grant figure represents the first instalment of my Department's five-year settlement for TfL announced in July 2004 following the 2004 spending review.